Israel's High-tech Industry Has a Diversity Problem. Here's Why

Omri Zerachovitz
Omri Zerachovitz
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Tech businesses on Shenkar Street in Herzliya
Tech businesses on Shenkar Street in HerzliyaCredit: Eyal Toueg
Omri Zerachovitz
Omri Zerachovitz

The Israel Innovation Authority has made efforts in recent months, in partnership with other governmental bodies, to create high-tech retraining programs. The logic is plain: Productivity in the industry is high, leading to lucrative salaries that enable employees to improve their economic situation. They are not talking necessarily about technological position, rather an attempt to expand the industry to other circles.

The fact that the high-tech industry was barely affected by the coronavirus crisis while many workers in more traditional jobs were fired or furloughed, the need and desire to expand the circle of high-tech workers grew. It’s no easy task; the percentage of high-tech workers in the economy has barely budged from around 9% in the past 20 years. In absolute terms, the number is now around 320,000 workers.

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Success in retraining workers for high-tech jobs is far from assured, as it requires locating workers with appropriate skills, providing them tools in relatively short order and finding employers who can hire them and are willing to provide on-the-job training. Such programs don’t necessarily end with trainees getting hired, but before we can even deal with the quality and usefulness of the training, we have to understand how trends make it hard for the high-tech industry to grow and push companies to recruit abroad.

1. Lack of skilled workers

The biggest barrier to expanding the high-tech industry is a lack of skilled workers. The reasons for this problem also explain why it looks as it does – male-dominated, excluding certain populations, concentrated in central Israel and full of graduates of the military’s technological units. We need not excuse the industry of responsibility for this situation, but it’s impossible to ignore that the training gaps begin at a young age, whether it be because of budgetary discrimination or gaps between the center and the periphery. For example, the gaps in Israel’s student performance scores between the top and bottom students in 2018 were far greater than the OECD (Organization for Economic Cooperation and Development) average, for instance the 356-point gap in Israeli math scores, compared to the OECD average of 297. It’s very hard to narrow these gaps later in life. The education system effectively seals the fate of many students.

The Taub Institute has shown how these figures directly affect the labor market. Institute researchers examined the OECD’s 2018 survey of adult skills (PIAAC) and found that 95% of skilled workers in the top 20% are non-Haredi Jews. Sixty percent of high-tech workers in Israel come from this sector of society. One of the problems in hiring new high-tech workers is the English language. The survey showed that 40% of Arab workers and 44% of Haredi workers said their command of English was weak, or they didn’t know it at all. Moreover, half of employees who don’t work in high-tech are low-skilled, making it very hard for them to join the industry.

The problem is that the high-tech industry is growing very quickly and needs the most suitable workers. The major companies and foreign R&D centers are capable of training entry-level workers and have the patience to do so, but the startups, some of which will become big companies, don’t always dedicate the required resources. Moreover, some industry members are calling for training more programmers, but there is also a price to pay: It’s hard for them to pick out the best candidates from all the resumés they receive.

The issue doesn’t only involve technology workers. In recent years, Israel has more companies that have expanded into non-technological areas. Companies like Wix, Fivver and Lemonade engage in Israel in marketing, finance, personnel and other areas. The problem is that these workers also need, for example, to know English or be highly skilled. The lack doesn’t stem solely from the education system; there are no training programs in Israel for these professions within the high-tech industry.

2. Connections

Monday.com, considered one of Israel’s most promising companies, employs 400 workers. As TheMarker in Hebrew reported last week, every new worker is asked to recommend colleagues from their previous place of employment. The names enter a database and anyone who gets three references gets contacted by the company. Monday.com isn’t the first high-tech company to rely on personal references.

This is why one can see programmers from the same army intelligence units in the same company. The ones left out are the workers trying to break in the traditional way, without someone to put in a good word for them or adapt a position to their skills. However, the problem on the other side is even bigger. Firms lack incentives to seek diversity because the risk of bringing in someone an employee knows is low.

3. Unsuitable recruitment

Israel Advanced Technology Industries, the umbrella organization of high-tech and life science industries, recently decided to train recruiters to improve how they recruit for diversity. A committee in the organization dealing with the matter will issue a call for proposals to various organizations dealing with these issues, define what standard is expected at every step of the recruitment process, and help put together a training plan that Jolt, a startup engaged in professional training, is developing.

Ultra-Orthodox workers at the offices of an Israeli high-tech firm, 2011. The subjects have no connection to the content of the article.Credit: Nir Keidar

Why is such training needed? The simple answer is a lack of diversity – 64% of employees are non-Haredi men. All other groups (women, Arabs and Haredim) are seriously underrepresented, each one for a different reason. It seems the companies aren’t to blame because the under-representation emerges in earlier stages, from schools and the military to academia. The companies see the lack of diversity as a symptom, not the root, of the problem.

However, as some of them perhaps are starting to realize, they also bear responsibility for finding the workers and not just relying on personal connections, for adapting interviews, for building a work environment that can accompany various populations and for attracting them. Organizations also need to verify that there are no biases in the way they make decisions about promoting and compensating workers.

Arab and Haredi workers are mainly employed by major corporations, some of which have begun to improve their recruiting processes. It still doesn’t happen among the vast majority of small companies; fast-growing ones focus on recruiting as many workers as possible and don’t invest time and resources necessary for diversity. The companies blame the pipeline, but in employing workers from a homogenous background they send a message to other demographic groups that there is no place for them. Training of recruiters is certainly a first, important stage, but it also requires a genuine intention to change the status quo.

4. Systemic sexism

Giants like Google, Nvidia and Facebook let new fathers take paternity leave for months, a refreshing change compared to the brief leave men can usually take in Israel. Paternity leave is an important step toward gender equality and researchers see men taking paternity leave spending more time with their kids at later ages. However, it’s hard to say that the work environment in high-tech is egalitarian and inclusive for women.

Worrying data from 2018 show that the gender gap widens over time. While it’s equal for the 18-24 group, the male-female ratio grows to 1.6 for the 25-34 group and 2.6 in the 35-55 group. Women start dropping out as they become mothers. The fact that women leave the industry at relatively young ages certainly doesn’t help other women enter.

While the industry is characterized by long hours and pressure, the departure by women in such numbers suggests that some employers aren’t flexible enough for parents, and not just women, who need to take care of their children. This inflexibility may be because men dominate the industry, and Israeli work norms even in the 21st century place the bulk of the child-rearing burden on women.

5. Shabbat restrictions

Wix, one of the largest high-tech employers in Israel, last year recruited some 1,500 workers worldwide. The need of businesses to improve their digital presence fueled Wix’s operations, which develops a system for building websites easily.

Nir Zohar, May 2, 2019.Credit: Eyal Toueg

During the first three quarters of 2020, the company added 24 million users, more than in any previous year. So about half the people the company hired were support staff. Their numbers double this year. Yet only a few dozen of Wix’s 1,350 support staff work in Israel. One reason for the small number of such workers in Israel is the need to support users in North America, which is responsible for 60% of its revenue, but more could be working in Israel.

Nir Zohar, Wix’s president, says the reason they don’t hire more support staff in Israel is rooted in the ban on having employees work on Shabbat. “We need to get official approvals the same way factories do, and they have to be done by name,” he says. “It doesn’t allow the flexibility we need. It’s a shame because it’s work that suits new immigrants, for example.”

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